COPPERBELT Energy Corporation Limited (CEC) has submitted to the Lusaka High Court that it is legally entitled to restrict power in the event of failure to settle outstanding amounts for power supplied by it to Konkola Copper Mines (in liquidation).
And CEC has insisted that Zesco Limited and KCM conspired between themselves and Energy Minister Mathew Nkhuwa to enter into a Term Sheet, which can only be performed or actualised by use of CEC’s transmission system, hence the declaration by Nkhuwa of its transmission and distribution lines as common carrier.
In this matter, Zesco Limited and KCM have sued CEC in the Lusaka High Court seeking a declaration that CEC’s action to restrict power supply to KCM contravenes the law.
Zesco and KCM are seeking an order of injunction restraining CEC by itself, its directors, officers or agents from interfering in the Time Sheet Agreement between Zesco and KCM through restricting KCM from receiving supply from Zesco, pending determination of the matter.
They also want, among others, an order restraining CEC from effecting or taking steps to take out any supply units, lines or delivery points to KCM as they are Common Carriers as declared under S.l. No 57 of 2020.
But in its defence, CEC argued that Zesco and KCM were not entitled to the reliefs they were claiming or any relief at all.
It also counter-claimed, citing Zesco, KCM and KCM Provisional Liquidator Milingo Lungu as first, second and third defendants, respectively.
In its counter-claim, CEC is seeking an order that Zesco Limited pays it US $144 million as compensation for the power supplied to KCM, which it could not recover due to the conspiracy between Zesco and KCM.
It’s also counter-claiming a declaration that the KCM Provisional Liquidator’s refusal or failure to settle the sum of US $144 million owed to CEC is in breach of Milingo’s statutory duty to CEC.
CEC is further counter-claiming, among others, compensation for loss of its income following an abrupt end to negotiations between it and KCM for renewal of the PSA, and an order that Zesco pays it by way of compensation, the value of the power supplied to KCM from June 1, 2020, until date of judgement.
But Zesco in its reply and defence to CEC’s counter-claim, stated that it had continued to sell power to CEC, but added that the trade was not based on any agreed and executed PSA, but on a schedule of supply Terms given to CEC before April 1, 2020, which supply Terms were received and acknowledged by CEC.
Zesco stated that at no time did it impose non-negotiable and unilateral terms to CEC, but rather proposed commercially viable terms commensurate to its operational costs of generating power.
It stated that it had continued to supply power to CEC, but denied that it was supplying the power on the same terms of the expired BSA.
“Zesco shall aver that it did not conspire with the Minister nor KCM to injure CEC’s business, but rather exercised its legal right to enter into a PSA with KCM to supply power and wheel the power using CEC’s infrastructure, which was duly declared as common carriers by the powers given to the Minister via Statutory Instrument No. 57 of 2020,” it stated.
But in its reply to Zesco’s defence to its counter-claim filed recently, CEC stated that the terms were not mere proposals as Zesco had made it clear in its communication to it (CEC) that the terms were non-negotiable.
It stated that Zesco imposed non-negotiable and onerous terms, which conduct amounted to an oppressive bargain.
“The plaintiff (CEC) will further say that the first defendant (Zesco) cannot use its dominant position to impose unfair terms on the pretext of achieving ‘commercially viable terms.’ The plaintiff will say that the first defendant, therefore, has continued to supply power on the terms as before and not on the terms contained in the purported express Schedule of Supply Terms,” CEC stated.
It stated that Zesco was fully aware that CEC was supplying power to KCM and further that the Power Supply Agreement (PSA) pursuant to which power was being supplied had expired and that CEC was engaged in negotiations for renewal of the PSA with KCM.
CEC added that Zesco and KCM negotiated and signed a Term Sheet for the intended PSA, while KCM was still in negotiations with CEC for renewal of the PSA.
“As further proof that Zesco was aware that CEC and KCM were engaged in negotiations, Zesco signed a Term Sheet with KCM. While there may be no legal restraint to Zesco and KCM negotiating and entering into a Term Sheet for the PSA, the manner in which Zesco and KCM conducted their business is clear proof of the conspiracy intended to injure CEC in its business,” it stated.
“The plaintiff will say that as a result of the first and second defendant’s conspiracy, the second defendant (KCM) is no longer under compulsion to settle its indebtedness to the plaintiff in the sum of US $144 million.”
And in its reply to KCM’s defence, CEC stated that it was legally entitled to restrict power in the event of failure to settle outstanding amounts for power supplied to KCM by it.
It added that KCM has never disputed owing the sum of US $144 million to CEC.
“The plaintiff will say that the first and second defendants conspired between themselves and the Minister of Energy to enter into a Term Sheet, which can only be performed or actualised by use of the plaintiffs transmission system and hence the declaration by the Minister of Energy of the plaintiffs transmission and distribution network as common carrier. The effect of the proceedings commenced by the first and second defendants was to enforce the Minister of Energy’s declaration so as to give effect to the Term Sheet for the PSA agreed between themselves,” stated CEC.
In reply to Milingo Lungu’s defence, CEC stated that Milingo was personally liable to pay the accrued debt of US $144 million as damages as a result of his breach of his statutory duty and for carrying on the business of KCM with intent to defraud creditors, contrary to Section 175 (1) of the Corporate Insolvency Act.